What If Only One Parent Is Willing to Plan?

Making matters much worse for one family, is the fact that while the mother is willing to speak with an estate planning attorney and make a plan for the future, the father won’t even discuss it. What should this family do, asks the article from nwi.com titled “Estate Planning: Can one spouse plan?”

Planning for your eventual demise and distribution of your worldly goods isn’t as much fun as planning a vacation or buying a new car. For some people, it’s too painful, even when they know that it needs to be done. There’s nothing pleasant about the idea that one day you won’t be with your loved ones.

Although contemplating the reality is unpleasant, this is a task that creates all kinds of problems for those who are left behind, if it is not done.

Unfortunately, it is not unusual for one parent to recognize the importance of having an estate plan and the other parent does not consider it to be an important task or simply refuses. In that case, the estate planning attorney can work with the spouse who is willing to go forward.

Some attorneys prefer to represent only one of the spouses, especially in a case like this. Spouses’ interests aren’t always identical, and there are situations where conflicts can arise. When a couple goes to the estate planning attorney’s office and wishes the attorney to represent both of them, sometimes the lawyer will ask for an acknowledgment that the lawyer is representing both of them as a couple. In the event that a disagreement arises or if their interests are very different, some attorneys will withdraw their representation. This is not common, but it does happen.

The estate planning lawyer usually prefers, however, to represent both spouses. Married couple’s estates tend to be intertwined, with real property jointly owned as husband and wife, or husband and husband or wife and wife. Spouses are usually named beneficiaries of life insurance and retirement accounts. Even in blended family situations, this holds true.

If the father in the situation above won’t budge, the mother should meet with the attorney and create an estate plan. The problem is, she may not be able to plan effectively for the two most common and usually the most valuable assets: their jointly owned home and retirement accounts.

If the home is owned by the spouses as “entireties property,” that is, by the couple, she can’t make changes to the title, without her spouse’s consent. One spouse cannot sever entireties property, without both spouses agreeing. Some retirement plans are also subject to the federal law ERISA, which requires a spouse’s consent to change beneficiaries to someone other than the spouse.

Even with these issues, having a plan for one spouse is better than not having any plan at all.

The only last argument that may be made to the father, is that if he does not make a plan, the laws of the state will be used, and few people actually like the idea of the state taking care of their estate.

Reference: nwi.com (Nov. 17, 2019) “Estate Planning: Can one spouse plan?”

What Should I Keep in Mind, When I Remarry?

Before you remarry, discuss any past financial issues with your fiancé, and plan for success, by considering some important ideas.

U.S. News & World Report’s recent article, “6 Financial Considerations for Remarriage,” lists six financial considerations and crucial steps to take before you remarry:

  1. Revise Your Budget. Whether this is your first, second, or third marriage, couples need to create a budget for daily spending, monthly expenses and big-ticket purchases. You should also talk about your household expenses and costs related to children from a prior marriage. If you have to pay alimony, let your new spouse know. It’s also a good time to talk about credit card debt, past investments you’ve made and retirement accounts. You may want to draft a prenuptial agreement.
  2. Inform your Fiancé of Any Financial Obligations, Including Child Support. Before getting married, review the laws to see how child support may be impacted by marriage to a new person. While it’s unlikely that you would lose your child support if you remarry, the family court may reduce the amount. If a person paying the child support is remarrying, they should talk to their partner prior to the marriage to make certain they understand the amount of the payments.
  3. Check Insurance and Benefits. A frequent mistake when remarrying, is not updating the beneficiaries of life insurance policies. You also may have to look at other updates to your coverage, like who will be on your health plan, and you may need to modify your homeowner’s insurance with a spouse and children in residence. Understand that if you get government benefits, like Medicaid or Social Security, you could forfeit your Medicaid eligibility when you remarry if your spouse’s income is too high to be eligible. You might also discover that your Social Security benefits from an ex-spouse will stop, after you remarry.

A second marriage may also increase a parent’s income for federal financial aid purposes for college. If a parent is the custodial parent for the FAFSA (Free Application for Federal Student Aid), their income now may include their new spouse’s income. It is important to discuss saving for college and tuition costs, as well as if either partner has children from a prior marriage, whether each spouse will save money for tuition costs.

  1. Estate Planning Is Critical. Check your estate planning before remarrying. That includes a will, medical powers of attorney, do not resuscitate orders, durable powers of attorney, designations of guardianship or consent to adoption and various trusts, including trusts for special needs children. If you have children from a prior relationship, hire a qualified estate planning attorney.
  2. Create an Inheritance Plan. If you have children from a prior relationship, you need to put the right estate planning documents in place to protect them from being disinherited. In some states, a last will and testament may be enough, but in others it may make sense to also have a revocable living trust.

The biggest mistake that couples commit when entering their second marriage, is thinking that their own children will inherit any of their estate, if they die first. Perhaps the adult children will inherit some of the estate, but you should speak to an estate attorney to create a customized strategic plan. In many instances, the living spouse will change the plan and leave everything to their children and nothing to yours.

Reference: U.S. News & World Report (November 18, 2019) “6 Financial Considerations for Remarriage”

Is Medicare Coverage Free?

Medicare has a variety of expenses—including premiums, copays and deductibles. CNBC’s recent article, “Here’s what you should know about Medicare costs if you’re nearing age 65,” found that half of respondents in a recent poll by consumer website eligibility.com, said they believe Medicare is free.  If you fail to sign up on time, you may face penalties for the rest of your life.

Fidelity Investments estimates that the average male-female couple will spend at least $285,000 on health care in retirement. The items not covered by Medicare—dental, basic vision, over-the-counter medicines, long-term care—would be in addition to that amount.

If you have at least a 10-year work history, you pay no premiums for Medicare Part A. This will cover hospital stays, skilled nursing, hospice, and some home health services. However, Part A has a deductible of $1,364 per benefit period and some caps on benefits. Part B—which covers outpatient care and medical supplies—has a standard monthly premium of $135.50 (in 2019). Higher earners pay more. This part has a $185 deductible (for 2019). After it’s satisfied, you typically pay 20% of covered services.

Those parts of Medicare don’t cover prescriptions, so a Part D drug plan is needed.

You can get a separate plan to use with original Medicare, or you can enroll in an Advantage Plan (Part C). This plan usually has prescription drug coverage. If you go with this, your Parts A and B benefits also will be delivered through the insurance company offering the Advantage Plan.

The average cost for Part D coverage in 2019 is $32.50 per month, according to the Centers for Medicare and Medicaid Services. However, high earners pay extra for their premiums. The deductible for 2019 is $415.

If you accessed your Social Security benefits before age 65, you’ll automatically be signed up for original Medicare. A month or two before you turn 65, you’ll be automatically enrolled, and your card will be delivered in the mail. You’ll see your Social Security check decreased by the cost of the Part B premium.

If you haven’t yet used Social Security, you must enroll proactively. There’s a seven-month enrollment period that begins three months before your birthday month and ends three months after it. If you have insurance through an employer when you reach age 65, you may be able to wait to enroll in Medicare without a penalty.

Even if you don’t take medicine right now, at least sign up for the cheapest drug plan just so you don’t face a penalty. This is because if you don’t enroll in Part B when you’re supposed to, you’ll see a 10% penalty for each year that you should’ve been enrolled. The amount would be in addition to your monthly premium. Part B enrollment isn’t required, if you have medical coverage from your job.

As far as Part D, the penalty for not enrolling when you were first eligible is 1% for every month that you could have been signed up—unless you have qualifying coverage through an employer’s plan.

Many people couple their original Medicare benefits with a supplemental policy—known as Medigap—to help cover out-of-pocket costs like deductibles and coinsurance. However, you can’t pair a Medigap policy with an Advantage Plan.

If you select an Advantage Plan, there may be limited coverage for dental and vision.

Reference: CNBC (August 29, 2019) “Here’s what you should know about Medicare costs if you’re nearing age 65”

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